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I want to know more about STPs and which kind of funds are good for it

I have been investing in mutual funds through SIP. Recently I came across terms like STP and Value STP. So, please educate me about them, how it works and which kind of fund/schemes are good to choose. Also, I would like to know which one is better?

Aug 20, 2016 by Basudev, Barbil  |   Mutual Fund

1) Thanks for your interest in knowing about STPs. Please read the following article which explains the concept of STPs and how it can be used for asset allocation and optimising mutual fund returns –

https://www.advisorkhoj.com/co...

2) As you can see in the above article, we have explained how STP can be very effective if you invest a lumpsum amount in a liquid fund and transfer a fixed amount periodically to an equity fund. You may check the returns from here https://www.advisorkhoj.com/mutual-funds-research...

3) Similarly, you may also invest a lumpsum amount in a liquid fund and transfer only the capital appreciation to an equity fund. Please check here https://www.advisorkhoj.com/mutual-funds-research...

4) The other way to optimise the return is to enhance the transfer value annually. Please check here https://www.advisorkhoj.com/mutual-funds-research...

5) With regards to your query about value STP, please note that few AMCs provide this method of STP. Generally speaking, in this concept, the amount transferred each month is based on the market value of your STP investments. For example, if you have transferred Rs. 1,000 this month to an equity fund, and in the next month the value of this investment goes up to say Rs. 1,100 then the amount transferred this month to the equity fund would be only Rs. 900 only in lieu of Rs. 1,000. Thus, the amount transferred during the entire period of STP would vary every month and depend on the valuation of the STP portfolio.

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